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Three more firms join race for mobile phone licences [Nation (Kenya)]
[February 26, 2014]

Three more firms join race for mobile phone licences [Nation (Kenya)]

(Nation (Kenya) Via Acquire Media NewsEdge) The fight for the control of mobile-based payments in Kenya has intensified with three more companies saying they want to operate such services.

Mobile Pay Ltd, which owns mobile money transfer platform Tangaza Pesa, Zioncell Ltd and Nakumatt Holdings now join Equity Bank in seeking a mobile phone licence.

The latest entrants are taking advantage of a new licensing regime allowing various classes of operators to run the telecommunication industry by becoming Mobile Virtual Network Operators. The aim is to own a SIM card through which they intend to roll out mobile payments services to rival Safaricom's M-Pesa.

"We need SIM cards to gain a greater market share in mobile payments. The market is dominated by one large player and we need a new tool to increase market access," Mobile Pay CEO Oscar Ikinu said.

Zioncell is an affiliate of Mobile Decisioning—a company that provides a range of mobile payment services. Zioncell has partnered with Airtel to introduce a service that is targeted primarily at church-going youth.

VIRTUAL SHOPPERS A MVNO licence allows a company to roll out telecom services without investing in the underlying infrastructure. Instead, these firms will ride on the networks of incumbent Mobile Network Operators (MNOs).

Mobile Pay, Zioncell Ltd and Equity Bank Group subsidiary Finserve Africa have formally applied for the permit, which Communication Commission of Kenya says it is evaluating before making the final decision.

Separately, Kenya's largest retailer, Nakumatt, said it would target its one million local shoppers with a mobile virtual network as part of larger strategy to diversify its business, although it is yet to formally apply for the licence.

"Nakumatt Holdings affirmatively confirms that such a strategic development is currently within our scope. Further information on the Mobile Virtual network operation including our preferred carrier and range of services will be, provided in due course," Nakumatt Holdings managing director Atul Shah told the Nation.

Tangaza received a licence to provide cross-network mobile money transfer services from the Central Bank in 2010, but the firm has been frustrated by the protectionist strategies of other players in the mobile money sector, Mr Ikinu said.

Although his firm will offer voice and data services once it gains a licence, Mr Ikinu said that it will focus its efforts on payment services.

Given its track record in cashless payments, Equity Bank will undoubtedly take a similar route.

CASHLESS PAYMENT "For the new players, voice and data are not going to be core businesses. E-commerce is becoming a big thing that this is probably what all these companies are targeting," Standard Investment Bank analyst Eric Musau said.

Low prices offered by virtual operators on voice and data could, therefore, precipitate a reduction in retail prices across the board.

These companies anticipate huge revenues with the implementation of government directives on cashless payments.

From April 1,all government offices will only accept cashless payments while the public transport sector has until July to ditch cash.

In East Africa, there are more people with mobile phones than bank accounts. So they are an essential medium or channel for the unbanked. Financial, insurance and media companies are all candidates of virtual network operators, according to Deloitte partner Nikhil Hira.

Equity Bank has been particularly keen on payments in both sectors. Last year, the company launched the BebaPay service in partnership with Google, which is supposed to facilitate contact-less payments in matatus.

Nakumatt last year replaced its loyalty card with a prepaid MasterCard branded card. The Nakumatt Global Card allows shoppers to earn loyalty points whenever they shop at MasterCard-accepting merchant outlets. In a statement, the firm said a licence will allow it to expand existing services.

"The operation of a mobile virtual network also affords us an opportunity to advance this business to the next level through a variety of new generation solutions," Mr Shah said.

Nakumatt would be following in the footsteps of other retailers such as the United Kingdom's Tesco and Sainsbury's that have launched mobile virtual networks.

However, the success of these endeavours will be no easy task. Mr Musau cautions that many MVNOs that have launched globally without a clearly defined niche market and strong distribution chains have flopped.

--------------------------------------------------------------------------------------------------------------- WHERE IT COUNTSWhy the firms are fighting    •  Money transmitted through mobile money hit Sh2 trillion in 2013.

   •  Electronic transfers by government to the elderly and orphans in 2014 — Sh12 billion    •  Estimated daily fare paid to Matatu in Nairobi—Sh225 million expected to go electronic in July.

   •  Government payments to go electronic by April 1,    •  Pension and insurance sectors have started collecting premiums and distributing money through mobile cash transfer.

(c) 2014 Nation Media Group. All Rights Reserved. Provided by, an company

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